Guest Post: Silver and Gold: Shelter From the Storm, by Gary Christenson

What storm? The stock and bond markets in the US are doing great, the media has sold the strong employment story, and all those nasty wars are far, far away.

So the top few percent are doing well and are sheltered from the storm, but what about the rest of us? What storms are pounding us?

Currencies are based on debt, and those dollars, yen, and euros are created every day to keep various financial bubbles inflated. Global debt is $200 Trillion and cannot be repaid except with deeply devalued currencies. Central banks are creating currencies, monetizing debt, reducing interest rates, and frantically promoting inflation to avoid deflation.

Inflationary forces are powerful. Huge devaluation of our currencies is occurring. This extends the illusion of exponential growth and diminishes the debt hardship. Most of what we need, such as food, energy, and health care will cost more every year.

Deflationary forces are also powerful. What happens when a few $Trillion of sovereign debt defaults and triggers many more $Trillion in derivative payouts – that might cause a chain of bankruptcies? Expect deflation in our bubble assets.

What will central bankers and politicians do? Extend and pretend, print currencies, create far more debt, and fabricate stories about how everything is good.

Look at the US national debt for the past 40 years. The exponential trend is clear – up 9% per year on average and about 10% per year since the 2008 recession/depression. It will rise until Congress drastically cuts spending (just kidding) or some nasty reset occurs. Exponential increases do not last forever so our current exponential increases in debt, stock prices, welfare, military expenses, and economic stupidity will end someday.

Gold and silver are real money, while dollars, euros, and yen are paper substitutes that circulate as currency in place of money. Look at the graph of the ratio of silver to the national debt for the past 20 years. Note the long term rise in the ratio and especially the increase since 9-11. Yes, there has been huge volatility in silver prices as shown by the ratio, but silver and gold – real money – are demonstrating their true value in the face of escalating debt.

Debt will increase and silver prices will rise more rapidly. Since silver and gold have been crushed during the past four years while stocks and bonds have rallied to new highs, expect those trends to reverse this year. When stocks and bonds decline central banks will accelerate their creation of currencies to reflate them and debt will increase even more rapidly, along with silver and gold prices.

Current (March 2015) Ratio

0.87

US National Debt

$18.15 Trillion

Silver price

$15.81

Suppose (more of the same – no hyperinflation):

Zone 1 (Approximately 2017) Ratio:

2.5

US National Debt

$23 Trillion

Silver Price

$55

Zone 2 (Approximately 2020) Ratio:

3.5

US National Debt

$30 Trillion

Silver Price (no hyperinflation)

$85 – $105

Other possibilities:

Global war and hyperinflation: They will create unbelievable levels of debt and tremendously higher silver and gold prices. $150 silver and $5,000 gold will look inexpensive if the US dollar hyper-inflates.

Nuclear war, financial and economic collapse, sovereign debt defaults, civil wars and new governments (unlikely, I hope): We better pray our leaders don’t push the world into such a global catastrophe. If they do who knows how high silver and gold will be priced and which currencies and governments will survive.

Everyone plays nice and there is minimal need for wars, false-flags, and other distractions. Extend and pretend miraculously works through the end of the decade. In that unlikely and benign case, US national debt increases at only 9% per year to about $28 Trillion, the silver to national debt ratio is subdued at 2.0 – 2.5 and silver is priced at only $50 – $75 in this “best of all possible worlds”. (More of the same, no hyperinflation, only small wars, it’s all good, etc.)

Bottom Line:

Debt will increase substantially from here, until a massive reset occurs.

Gold and silver, in spite of financial cartel resistance, will assert their real value and be priced much higher, depending on the quantity of debt created, loss of confidence in government and central bankers, and the amount of chaos that occurs during the coming storm.

Exponentially increasing systems do not last forever. Gold and silver do.

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James Wesley Rawles

James Wesley, Rawles (JWR) is Founder and Senior Editor of SurvivalBlog, the original prepping /survival blog for when the Schumer Hits The Fan (SHTF). He began SurvivalBlog in 2005. It now reaches more than 320,000 unique visitors weekly.
JWR is a journalist, technical writer, and novelist. His survivalist novel Patriots: Surviving the Coming Collapse, is a modern classic that reached #3 on the New York Times bestsellers list. Two of his other novels have also been best New York Times bestsellers.
Jim is the originator of the American Redoubt movement and a frequent talk show guest on shows such as Alex Jones. He is also a retreat consultant specializing in off-grid living, rural relocation, and survival preparedness.

Hugh James Latimer

Hugh James Latimer (HJL) is the Managing Editor of SurvivalBlog, the original blog for prepping and survival for when SHTF, where he manages the blog's day-to-day operations, applying his diverse technical, management, and editorial expertise.
HJL earned college degrees in engineering, metallurgy, and education and has worked as Technical Editor for five international technical journals and as an engineer for Sandia National Laboratories. His deep scientific background ranges from aerospace engineering to systems administration and owning his own technology-intensive business.
HJL is a firefighter/EMT, and Ham radio operator. He's a Libertarian, an Eagle Scout, and most importantly a devoted follower of Jesus and the Bible.

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